In order to halt the progress of AI in China, the US imposed an export ban on AI chips to China. Later the US reversed the policy and China has started using Nvidia’s hardware without admitting that China is buying time for domestic chip makers such as Huawei to catch up the technology, China is keeping trade talks pressure on the US. Venson Huang has been welcomed in China after this development. Even then cyber authorities have summoned Nvidia to discuss about the alleged security risks related to H205, and China is discouraging the local companies to avoid the chips in demand.
The US response to this is that China fears Nvidia chips becoming the standard there. It is a simplistic view. Chinese companies have stockpiled billions of dollars worth chips even before the ban. Nvidia’s tech stack has already become a standard there. China expresses its fears but has not banned the chip imports from the US.
Western media feels that the reality is more nuanced. The Chinese criticism is not an official rebuke. It was meant to make Nvidia ‘squirm.’ It worked Nvidia made a public denial of the breaches.
China wants to replace Nvidia chips with Huawei chips. But the domestic players are still not ready for prime time both in terms of performance and quantity. DeepSeek is training its hardware on Huawei instead of Nvidia’s. It has to work out, and so far it has not. DeepSeek is using Nvidia chips as a compromise.
The US has imposed a payment of 15 per cent of revenue to the US for chip sales on the mainland. It is a pay-for-deal and could lead to a backlash. China too realizes this. China is pretending that it does not need US chips. But in fact it is building a bridge until its own domestic players are ready. Maybe, this point is approaching. Nvidia is preferred still because of its supporting software system. Domestic players will take time to catch up. When this point is reached US-led export controls will be ineffective.
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