Epoch AI research finds China more exposed to semiconductor supply shocks (fab capacity constraints, design-tool dependencies, rare-element sourcing) than the U.S.
If the global chip supply chain seized up tomorrow, both superpowers would feel it. According to new analysis from Epoch AI, China would feel it more.
Epoch AI modeled what happens to each economy when semiconductor flows are disrupted. The conclusion is directional and clear: China suffers worse on both cost and economic damage.
China remains heavily dependent on imports for advanced semiconductor tools and materials—the expensive, hard-to-replicate machines and inputs needed to manufacture cutting-edge chips. US export controls intensify that dependence. Washington has spent recent years restricting what China can buy, so a supply shock would hit a system already constrained.
Epoch AI's broader work on chip supply chains has identified three major bottlenecks in AI hardware: advanced logic wafers, CoWoS, and high-bandwidth memory (HBM). Logic wafers are the silicon brains of a chip. CoWoS is an advanced packaging technique that stitches components together. HBM is the ultra-fast memory that keeps AI processors fed with data. Losing any one of them halts production of finished chips.
An Epoch AI report published April 29, 2026, estimated that between 290,000 and 1.6 million H100-equivalent chips were smuggled into China through 2025. The median estimate is 660,000. Smuggled chips account for roughly one-third of China's total AI compute capacity, by the group's calculation. The wide range—the high end exceeds the low end by more than five times—underscores how opaque this market remains.
Interdependence runs both directions. China dominates manufacturing of certain electronic components. The US controls advanced design technologies and crucial fabrication capabilities. The US, meanwhile, depends on Chinese transformers—the electrical type—for its data centers, and AI buildout cannot proceed without them.
Taiwan and Hong Kong both show high export dependence on AI-enabling goods, tying their economic fortunes closely to how the US-China chip standoff unfolds. Epoch AI also tracks consumption of components that go into AI chips. That analysis reveals heavy reliance on a handful of firms: Nvidia, AMD, Google, and Amazon, particularly for HBM and advanced packaging capacity.
The smuggling estimates complicate the export-control picture. If roughly one-third of China's AI compute arrives through unofficial channels, enforcement matters as much as rules on paper. HBM, advanced packaging, and leading-edge wafers are already constrained. A shock in any of them would ripple through Nvidia, AMD, Google, Amazon, and everyone downstream who depends on their hardware. US dependence on Chinese transformers for data centers represents a parallel, quieter risk.