The US and China are embroiled in a heated dispute over advanced semiconductors, threatening the fragile truce reached on tariffs. Beijing has accused Washington of “undermining” their recent agreement by warning companies against using AI chips made by Huawei, China’s national tech champion. The conflict centers on Huawei’s Ascend chips, which are used to train AI models and challenge Nvidia’s dominance in high-end chip design.
China’s Response to US Export Controls
China’s Commerce Ministry has fired back at the US, accusing it of “abusing export controls to suppress and contain China” and engaging in “typical acts of unilateral bullying and protectionism”. The ministry warned global businesses that anyone implementing or assisting in these US measures may face legal action under China’s Anti-Foreign Sanctions Law. “China will closely monitor the implementation of the US measures and will take resolute steps to safeguard its legitimate rights and interests”.
Nvidia CEO Criticizes US Export Controls
Nvidia CEO Jensen Huang has expressed concerns about losing access to the Chinese market due to US export restrictions. He estimated that the China market could be worth $50 billion next year and lamented the ban’s impact on Nvidia’s inventory, which has forced the company to write off “multiple billion dollars”. Huang believes US export controls have given Chinese AI companies “the spirit, the energy and the government support” to accelerate their own development. “I think, all in all, export control was a failure”.
Market Impact
The ongoing trade tensions have significant implications for the global economy. According to the US-China Business Council, $140.7 billion worth of American exports to China are subject to retaliatory Chinese tariffs, potentially devastating American exporters. The trade war’s impact is already evident, with US exports to China declining due to the tariffs.
Key Developments
- Trade Talks: US Trade Representative Jamieson Greer and Chinese trade envoy Li Chenggang met on the sidelines of APEC trade ministers in South Korea, but there has been no announcement on further trade talks.
- Nvidia’s China Market Concerns: Nvidia’s Huang believes the US government should allow American technology to compete in the China market.
- Huawei’s Advancements: Huawei’s Ascend chips are central to China’s plans to develop cutting-edge semiconductors and challenge US dominance in AI.