US export controls on advanced AI chips cost Huawei an estimated $70 billion in foregone revenue.

American export controls on advanced semiconductors have been in place for four years—long enough to evaluate what they've accomplished. The goal was to deny China the hardware needed to compete at the frontier of artificial intelligence. Yet the outcome tells a different story.

Four years later, Chinese chipmakers that once struggled to find domestic buyers now operate at capacity. Chinese AI models are winning enterprise customers. Chinese executives publicly credit Washington's restrictions with accelerating their progress. While D.C.'s export control policy began with sound intentions, the result has disproportionately benefited China's long-term AI ambitions and harmed U.S. firms.

The U.S. economy has effectively become a "highly leveraged bet" on winning the AI race—a bet that appears increasingly uncertain. Chinese AI models, operating 60 to 90 percent cheaper than American alternatives, are quietly capturing customers that built U.S. companies' valuations. Coinbase and DoorDash are already routing workloads to Chinese models. We are witnessing a market-by-market migration to cheaper Chinese infrastructure.

Recent reports underscore how quickly China has closed the gap. Bloomberg documented China rapidly closing the performance gap while already winning on cost and global adoption. Stanford University found earlier this year that China has "nearly erased" America's AI lead. Forbes and BCG now describe the competition as a duopoly: two increasingly incompatible tech stacks, with the window for flexibility closing fast.

Alvin Graylin, a well-respected technology executive in Asia, traces these developments directly to export controls. Through conversations with the founders and CEOs of China's leading GPU companies, he learned that many would have failed without the American chip ban. Few buyers existed for Chinese GPUs before the restrictions. The ban is the only reason several of these companies survive. Biren Technology reported a 22-fold revenue surge, directly attributable to the domestic market the U.S. chip ban created. Cambricon reported its first-ever full-year profit, with revenue up 450 percent.

Huawei's rotating chairman Xu Zhijun offered the most telling acknowledgment, explicitly thanking the U.S. government for its export restrictions, saying they "supercharged" China's semiconductor research and development. Cut off from American suppliers, Huawei built its own chip architecture under pressure, then launched a Model-as-a-Service platform across nine countries. The restrictions assumed Huawei couldn't build its own stack. It now sells that stack globally.

Huawei's recent export pitch to Egypt illustrates Xu's point. Huawei proposed building AI data centers from the ground up for Egypt, including 1,408 Ascend 950-series chips for a training cloud, 600 more for inference clusters, with 12-month delivery. Winning would have made Huawei a key AI provider to Africa's second-largest economy and established Middle Eastern presence—the region where the U.S. has invested heavily in more lucrative UAE and Saudi Arabian markets. It would represent the first confirmed Huawei Ascend accelerator export after more than a year of attempts, proving genuine foreign demand for Chinese chips exists.

Once developers build on Huawei's models and companies migrate to its cloud infrastructure, they typically don't return. BCG warns the window for companies operating across both tech stacks is rapidly closing. Countries face a choice. Every month that window remains open increases the cost of pivoting back to American providers.

Washington remains fixated on having the best model, ignoring the power of "good enough but cheaper" alternatives for many customers. China is closing the quality gap while grasping a fundamental truth: models come and go, but infrastructure endures. The country whose technology powers the world sets the terms of the AI age. Huawei is pushing beyond its domestic market with lower-cost models. Chinese AI and semiconductor companies' revenues are surging, with China's own tech executives crediting U.S. restrictions with accelerating their drive for self-reliance.

The simple reality is that export controls have not stopped China's advance but accelerated it. Four years is long enough to acknowledge that the controls are not working—and to allow American firms to compete globally. The current system doesn't permit that.