US export controls prevent China from accessing advanced AI chips, constraining domestic AI infrastructure buildout capability.
China cannot export artificial intelligence hardware because it lacks access to the advanced chipmaking equipment needed to produce competitive AI chips. While Huawei, the state-backed company leading China's AI efforts, can produce a limited volume of specialized GPU chips that artificial intelligence requires, the company's quality and capacity remain severely constrained. The Trump administration's limits on advanced chipmaking equipment sales to China, which have been expanded under Biden, are the primary cause of this deficit. This export control regime stands in stark contrast to other technology sectors where Chinese companies have emerged as major global producers.
The quantitative disparity is substantial. According to Barath Harithas of the Center for Strategic and International Studies, using SemiAnalysis research, China will have installed around 1.9 million Huawei GPUs by late 2025. However, China plans to install around 1.9 million of Nvidia's H20 or B20 GPUs—chips modified to work more slowly to fall below performance thresholds regulating US sales to China—by the end of the same year. In contrast, the US, with an economy only slightly larger than China's, will have installed four times as many AI chips by the end of 2025. The quality gap further widens this advantage. Huawei's Ascend 910b reportedly reaches between 280–400 TeraFLOPS compared to 2,250 TeraFLOPS for Nvidia's most advanced Blackwell chips, meaning it takes multiple Huawei chips to replicate a single leading Western chip.
Export controls on chipmaking equipment, particularly extreme-ultraviolet (EUV) lithography tools, account for this technological divide. The Trump administration's encouragement of the Netherlands to restrict sales of these critical EUV machines to China in 2018 set back China's semiconductor advancement significantly. ASML's CEO has stated that restrictions on these tools will keep China 10–15 years behind. These machines represent the world's most complicated tools and are essential for high-end chip production, which China currently cannot manufacture independently.
As a consequence, China imports more AI chips than it can produce domestically, purchasing specifically downgraded Western chips despite producing inferior chips at home. All of China's limited domestic chip production is devoted to building its own AI infrastructure. DeepSeek's CEO, representing one of China's leading AI firms, recently acknowledged: "Money has never been the problem for us; bans on shipments of advanced chips are the problem." Unlike in 5G, where Huawei could produce comparable technology to Western firms, Huawei's AI chips are lower quality and produced in insufficient volumes. This reality ensures that Western firms remain the only serious suppliers of cutting-edge AI chips and datacenters globally for the foreseeable future.