U.S. Chip Restrictions May Be Boosting Huawei in Global AI Race

US semiconductor titans are observing with increasing interest as export controls targeting China seem to have unintended consequences. Instead of holding back China's technological advances, the controls are potentially fueling Huawei's growing dominance of the world's most rapidly expanding AI market. The Trump administration widened export controls in early April 2025 to cover Nvidia's H20 AI chip, essentially preventing China's biggest U.S. buyers from selling their top AI processors. The costs were straight away and drastic – Nvidia shares fell 8.4%, AMD fell 7.4%, and Intel fell 6.8%. Nvidia is currently under the threat of a $5.5 billion quarterly write-down, while AMD estimates charges of up to $800 million. "We will continue to optimize regulatory-compliant products to serve the Chinese market," Nvidia CEO Jensen Huang said in public remarks. But individuals close to the matter report that Huang has warned U.S. officials in private that these restrictions could inadvertently drive Huawei's leadership in the global AI chip market. Huawei's AI Chip Rise Amidst US Sanctions In spite of being under U.S. sanctions since 2019, Huawei has made record strides in developing AI chips. With the help of state-owned foundry SMIC, the company has doubled the yield of its Ascend series chips to as much as 40% within a year. Industry analysts say this is close to commercial viability, and Huawei is working towards achieving the industry benchmark of 60% yield for similar chips. The timing of Huawei's recent announcement was opportune. In the immediate aftermath of the most recent U.S. sanctions, the company announced its new-generation Ascend 920 chip, which will come into mass production during the second half of 2025. [caption id="" align="alignnone" width="1600"] Credits: The Economic Times[/caption] The AI chip will deliver over 900 teraflops per card with 4 terabytes/second memory bandwidth – positioning it squarely against the now off-the-shelf Nvidia H20. What is so appealing to Chinese technology companies about Huawei's products is the cost aspect. Although the existing Ascend 910C chip delivers about 60% of Nvidia's H100 performance, two Ascend chips cost less than one Nvidia H100 and offer 20-30% higher processing power. This cost-performance ratio is becoming irresistible to Chinese AI companies seeking affordable alternatives. The interest is much higher than corporate profits. China's AI sector is growing at a phenomenal pace, with the likes of Tencent, ByteDance , Alibaba, and Baidu pouring billions into building AI infrastructure and large language models that compete with their Western counterparts. Alibaba alone has pledged more than $52 billion for AI and cloud computing by 2025. Huawei's GPU Transition Signals China's AI Ambition The turning point this year was when leading Chinese AI player DeepSeek made its complete transition from non-Chinese GPUs to Huawei GPUs for production workloads. That switch indicates a bigger trend in the industry toward Chinese-made AI hardware and is a significant step toward technological independence. "The U.S. export controls can have the opposite effect of what they're intended to have," says technology analyst Sarah Chen. "By keeping American companies out of a huge market, the controls give Huawei an opportunity to gain more market share and use the revenues to continue to develop their technology." Experts opine that while Nvidia chips are still ahead of Huawei's top chips by approximately 40%, that gap is fast narrowing. Gregory C. Allen, director at the Wadhwani AI Center of the Center for Strategic and International Studies, adds further that China's expanding domestic ecosystem, supported by government incentives and collaborations with AI startups, is driving this convergence. Outside of Huawei, Chinese companies are stepping up the drive to be chip-independent. ChangXin Memory Technologies and Biren Technology are investing big in producing domestic memory chips and GPUs that may one day replace Western technology altogether. The issue is not merely one of commercial rivalry – it is a geopolitical battle about who dictates the future of AI infrastructure. As China develops an autonomous AI ecosystem that is immune to American control, we can expect the international AI landscape to split off into one led by Chinese companies and the other by American companies. For American chipmakers, increasingly, the worry is that while attempting to restrict China's tech rise, US policy is indirectly giving Huawei keys to the fastest-growing AI marketplace in the world – a reality that could redraw the global digital map for generations to come.

U.S. Chip Restrictions May Be Boosting Huawei in Global AI Race

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