China is building an independent AI chip supply chain with Sino-Russian partnerships, hedging against US export controls.

When German Gref, chief executive of Sberbank, told Russian state broadcaster Channel One in May that he hoped to run the country's flagship GigaChat AI model on Chinese-made processors, it highlighted how difficult accessing the global supply chain had become for countries like Russia. Sberbank, Russia's largest lender and driving force behind the nation's AI push, is seeking Chinese chips because Western sanctions continue to block its access to advanced hardware. Tom's Hardware reporting suggests the most likely candidate to power Sberbank's systems is Huawei's Ascend 950 family, the most advanced silicon China currently produces.

Securing those chips from Huawei will prove difficult. The Chinese chipmaker already faces enormous orders from ByteDance, Alibaba, and Tencent—ByteDance alone committed $5.6 billion to the Ascend 950 earlier this year. Huawei is targeting 750,000 units of that chip in 2026 and expects to earn $12 billion in AI chip revenue throughout the year.

U.S. sanctions are pushing China to develop its own chips, which in turn attract other controversial states, potentially enabling China to extend its reach across an entire parallel supply chain. "Economic restrictions are pushing Russia toward Chinese compute solutions," said Allen Maggard, senior analyst at C4ADS, the Washington DC-based global security nonprofit. But Russia doesn't need much pushing. "I don't see a scenario in which Russia can economically scale its domestic compute capacity using Western solutions alone," Maggard explained. Russia's constrained economy is a factor—its defense industry can afford Western chips for individual weapon systems, but its civilian tech sector cannot. "That leaves China's electronics and computing sectors as Russia's most economical option going forward."

Sberbank is not an isolated case. Tramplin Electronics, a Russian sovereign IT company established just over a year ago, is already marketing a processor called Irtysh based on a design from China's Loongson Technology. Element, Russia's biggest chipmaker in which Sberbank acquired a 41.9% stake in January, has reportedly begun producing microchips inside China for the Chinese automobile market. "A shift is clearly underway," Maggard said, "but toward greater mutual access between the Chinese and Russian electronics sectors, probably skewed in China's favor."

This amounts to less a meeting of equals than Russia becoming a dependent customer of a still-developing semiconductor ecosystem. Maggard notes that under Vladimir Putin, the Kremlin will likely resist total surrender of sovereignty. "Moscow would certainly prefer, and likely intends, to build a parallel technology bloc with Beijing," he said.

The irony is striking: Western policy designed to slow or stymie China and Russia's high-tech development may have helped manufacture exactly the kind of trading bloc it aimed to prevent.

The problem is compounded by uncertainty in Washington. In the span of 12 months, the Trump administration banned Nvidia's H200, unbanned it, slapped a 25% tariff on it, and created a licensing framework experts immediately called contradictory. On January 13, the Commerce Department published a regulation permitting advanced AI chip sales to China—described by the Council on Foreign Relations as "strategically incoherent"—that if implemented strictly would block most exports, but if implemented loosely would fail to address any concerns motivating the controls. Then, a day after the rule cleared Nvidia to sell, Chinese customs officers were reportedly told not to let the chips into the country at all.

China is capitalizing on the chaos. Beijing's drive toward self-sufficiency long predates Washington's actions. Mishel Kondi, senior analyst with C4ADS's Human Security and Conflict Prevention team, noted: "The PRC announced Made in China 2025 in 2015. That precedes export controls." Her analysis of Chinese government documentation shows China has maintained state-directed strategic priority to break from U.S. and friend-shored technologies. "China's goal of building a more self-contained AI chip ecosystem predates U.S. export controls," she said.

Kondi cautioned that it's too early to judge whether export controls are a triumph or failure. "U.S. export controls have created real challenges for China's compute and limited its ability to scale and innovate," she explained, even as Chinese actors exploit loopholes through university procurement, transshipment via Southeast Asian jurisdictions, and corporate diversion through shell companies in secrecy jurisdictions such as the Cayman Islands. Yet there is risk in feeding the beast. "The risks of accelerated domestication grow if China has greater access to advanced chips," she warned, "and it would be a mistake to interpret that strategy as a response to export controls." China has reportedly gained access to an EUV machine it was never meant to obtain.

China's chip sector bolstering is beginning to yield results. Lisuan Tech, a Shanghai start-up founded in 2021 that nearly went bankrupt in 2024, has begun shipping the LX 7G100, China's first fully homegrown gaming GPU built on a 6nm process using in-house architecture called TrueGPU. It sells for roughly $480. Despite pre-launch claims rivaling Nvidia's RTX 4060, independent benchmarks on Bilibili placed it closer to an RTX 3060. But it exists, it is wholly Chinese, and it is being sold into a captive domestic market.

Beyond China's border, that captive market increasingly includes Russia. The Russian market for GPU-based AI accelerators reached 62.7 billion rubles in 2025, up roughly 20% year-on-year, according to Russia-based analysts TAdviser. Nvidia-based cards still account for around 84% of sales by volume, with the RTX 4060 the single most popular model. Russian customers are increasingly forced to look at Chinese cards as alternatives. Nvidia chips arrive through grey channels routed through China, Turkey, the UAE, and India at a premium.

In late May, the European Commission proposed a nine-month derogation on dealings with Yangzhou Yangjie Electronic, a Chinese chipmaker it had added to its 20th Russia sanctions package barely a month earlier, after EU automakers warned chip stocks could run dry within weeks. European carmakers needed the chips following the Nexperia crisis disrupted supply across the continent. Both Russia and China will have noticed Europe's expediency in dropping sanctions when needed.

By that point, China may be competing on the global stage. In late May, Huawei said its high-end chips would reach transistor density equivalent to 1.4nm processes within five years, unveiling a "Tau Scaling Law" focused on shortening interconnects and improving data movement rather than shrinking transistors. TSMC plans to begin 1.4nm mass production in 2028, meaning Huawei would still be three years behind—but the gap is closing.

Kondi is watching carefully. The risks of accelerated Chinese domestication grow with each passing year.