By Marcelina Horrillo Husillos, Journalist and Correspondent at The European Business Review
The Donald Trump administration stated that “using Huawei Ascend chips anywhere in the world violates US export controls.” The logic is that even if it’s a Chinese-made semiconductor, if it contains US technology, it is subject to US export regulations, a measure to prevent Chinese AI chips from expanding their presence in the global market.
The US Department of Commerce’s Bureau of Industry and Security (BIS) provided the industry with a notice containing this information, specifying Huawei Ascend 910B, 910C, and 910D series as chips with a high possibility of violating export control regulations. Recently, these have been widely used in China for AI training and inference and have been noted as alternatives to NVIDIA products.
Additionally, BIS plans to warn companies and consumers about the consequences when US AI chips are used for AI model training and inference in China. The plan is to block China’s strategy of indirectly securing advanced US AI chips through third countries.
Nvidia’s CEO Jensen Huang warned that export controls on its highest-end chips, as part of US government initiatives to restrict China’s access to AI technology that began under Joe Biden, could cost the company $50 billion.
This is probably the first time we have seen mention of the AI chips in official documents, and this shows how far Huawei has come with its Ascend AI lineup. It is revealed that the use of Ascend accelerators anywhere in the world will be considered a violation of US export control, which shows that the Trump administration doesn’t want these chips to end up anywhere apart from China, limiting their scope of influence.
Also, the use of US AI chips, particularly from NVIDIA, to train Chinese AI models will now be much more scrutinized. This could be done by integrating “tracking features” into NVIDIA chips to see where they end up. This is very much a possibility now, given that a bill to implement this is now with the US Senate, so it won’t be long before we see AI chips coming with location tracking features or even a kill switch.
NVIDIA Challenged Monopoly
Amazon unveiled its latest AI chips last month in a bid to reduce its dependence on market leader Nvidia and take a share of a multibillion-dollar market.
Central to this effort is the introduction of Trainium 2, Amazon’s newest chip built for training massive AI models. Amazon is hardly alone. A growing cohort of Big Tech companies are eager to challenge the commanding lead of Nvidia in designing cutting-edge AI chips.
Nvidia has been at the forefront when it comes to supplying chips that power large language models, such as the one used by OpenAI’s ChatGPT. Nvidia’s near monopoly has propelled the company’s valuation past $3.4 trillion, leaving competitors including AMD scrambling to close the gap.
In November, Nvidia reported an impressive 94 per cent annual revenue growth for the third quarter, reaching a record $35.1 billion. Questions remain, however: how long can Nvidia stay on top? And how can it do so? As Nvidia’s chief executive Jensen Huang stated: how can the company keep growing when it already has the largest market share of AI chips?
Some of Nvidia’s biggest customers, including Amazon, Microsoft and Google, are spending billions of dollars to build their own custom chips. In many ways, Big Tech’s push to unseat Nvidia is a familiar story: develop in-house hardware to reduce reliance on outside suppliers, cut costs and achieve tighter control over one’s own technology.
But overthrowing Nvidia is no small feat, even for these tech giants. They all rely on the same manufacturing partner: Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chip manufacturer. Because TSMC produces chips for so many companies, no single rival gains a manufacturing edge over Nvidia. Furthermore, TSMC’s pricing structure favours those placing larger orders. Companies such as Nvidia benefit from lower per-unit costs, reinforcing an already sizeable advantage.
HUAWEI’s Towards Independence
China’s race for technological independence gains momentum as Huawei develops a new AI processor designed to challenge Nvidia’s dominance. Huawei is developing its own AI semiconductors to replace NVIDIA’s high-performance AI semiconductors. It is showing moves to solve all processes, including semiconductor design, production, and packaging, in China. Recently, satellite images of a semiconductor factory Huawei is building in Shenzhen were reported by the Financial Times (FT).
According to tech industry and company data, the performance of Huawei’s latest semiconductor ‘Ascend 910C’ has reached 60-80% of NVIDIA’s flagship product ‘H100.’ The price is 70-80% cheaper than the H100.
DeepSeek, a Chinese AI startup gaining attention in the global AI market, used low-spec NVIDIA semiconductors in the AI development process but used Huawei products in the AI service process.
When China-based DeepSeek launched its AI platform in January – it was virtually free and hyped to be even better that ChatGPT and the rest of the field, upending the entire AI world. Then in March, DeepSeek itself was usurped by the launch of Qwen, the open-source generative AI service from Alibaba. All share three common denominators – China-made, lower-priced and improving, if not already better, in quality.
It remains to be seen if big AI chip players will be affected by Huawei’s new launch. But if DeepSeek taught us anything, it is that any new platform can be disruptive, costly and may cause a shift in perception on US tech, the argument being it is possible to create something good for cheaper.
The launch of R1 DeepSeek AI updated model in January sent tech shares outside China plummeting and challenged the view that scaling AI requires vast computing power and investment. Since R1’s release, Chinese tech giants like Alibaba and Tencent have released models claiming to surpass DeepSeek’s.
US pushing for exports in the Middle East
Coinciding with President Trump’s Middle East tour, NVIDIA decided to supply 18,000 of its latest AI chips, the GB300 Blackwell, to Humane, a company owned by the Saudi sovereign wealth fund. It plans to supply hundreds of thousands of advanced chips over the next few years. These chips will be used in data centers being built by Saudi Arabia to foster AI.
Bloomberg reported that the Trump administration is pushing a deal to allow the United Arab Emirates (UAE) to import more than 1 million of NVIDIA’s advanced semiconductors. This is about four times more than what was allowed under the AI semiconductor export controls of the previous Joe Biden administration.
Unsurprisingly, Chinese experts characterize the United States’ Middle East policy under Trump as transactional and commercially driven, mostly in negative terms. More bluntly, Liu Zhongmin, professor at the Middle East Studies Institute of Shanghai International Studies University (SISU), characterized Trump’s visit as “a blatant money-making trip,” adding that:
“Trump aggressively leveraged the United States’ advantages to extract wealth from the Gulf states, even blatantly enriching himself and his family, a rare and overt display of greed rarely seen in previous U.S. presidents.”
The Trump administration is blocking Chinese AI chips while increasing exports of US AI chips. This aligns with what CEO Huang and other US big tech CEOs have recently said, that the US must supply more AI chips to the global market to win the AI competition with China.
On the other hand, the Founder of Huawei Technologies, Ren Zhengfei believes that AI is becoming unstoppable. It is creating turning points for many firms. If Huawei uses AI in the best ways, it could achieve more success in the time ahead. However, the company needs to put more effort into being at the top in the AI race.
Conclusion
Earlier this year DeepSeek upended beliefs that US export controls were holding back China’s AI advancements after the startup released AI models that were on a par with or better than industry-leading models in the United States at a fraction of the cost.
In the meantime, and as per the claimed performance of DeepSeek R1, Nvidia suffered the biggest one-day loss in sharemarket history, other tech giants – Microsoft, Alphabet and Amazon, who are investing heavily in competing AI tools including ChatGPT and Gemini – were also hit. Almost A$1 trillion (US$600 billion) was wiped off the value of artificial intelligence microchip maker Nvidia overnight, when a little-known Chinese startup, DeepSeek, threatened to upend the US tech market.
Stock prices are driven by market expectations. Investors have rapidly incorporated the news of a low-cost Chinese AI competitor into stock prices, anticipating this new entrant could disrupt the market and erode the competitive advantage of existing leaders.
An analogy can be found in the present situation between NVIDIA and Huawei Ascend chips, moreover the reliance that the first has on TSMC, reaffirms the US multinational vulnerability to navigate and seek fast sales in a highly competitive market.
Investors’ role – who are closely watching these vertiginous changes – is betting on the most advantageous and competitive deals taking place in the global market. NVIDIA’s tricky position is being globally exposed, while China tech advancements, which by all means, seem unstoppable, keep challenging the traditional US tech hegemony.
