Illustration: Liu Xidan/GT

How effective are the escalating US chip export controls against China?MKS sports It's worth listening to the industry's perspective. Nvidia CEO Jensen Huang is unsure if export controls against China are effective national security measures for the US amid the artificial intelligence (AI) race, but they've certainly hurt the chipmaker's business abroad, as Business Insider reported while summarizing Huang's latest interview on CNBC.

Nvidia on Wednesday reported revenue for the fourth quarter ended January 26, 2025, of $39.3 billion, up 12 percent from the previous quarter and up 78 percent from a year earlier. 

Nvidia's finance chief Collette Kress said demand in China - where US trade controls have blocked the firm from exporting certain chips - remained lower and that the firm expected shipments to remain roughly at the current level, according to the BBC.

In China, alongside the latest surge in AI technology, the demand for semiconductor products has been steadily increasing. However, whether this can translate into demand for American-made chips depends on multiple factors, including the competitive dynamics of chips produced by China's domestic manufacturers and those from other nations, as well as Washington's export controls on chips to China, which have curtailed China's demand for American-made chips.

Nvidia likely feels the impact of this situation acutely. Huang, in an interview with CNBC on Wednesday, stated that "our percentage revenues in China before export controls is twice as high as it is now."

Nvidia plays a significant role in the US chip supply chain and can also be seen as a microcosm for observing the impact of Washington's export controls on the country's chip industry. As the US continues to ramp up its export control measures, the negative effects on the US chip supply chain are deepening.

US export controls on chips have imposed limitations on American companies, so what impact has this had on the Chinese chip industry? Various indicators reveal that China's chip sector is advancing in terms of production capacity, market scale and research capabilities. Huang said "there's a fair amount of competition in China," indirectly corroborating the growth and enhanced competitiveness of the related industries in China. 

China's production of integrated circuits grew by 22.2 percent year-on-year in 2024, according the National Bureau of Statistics. Despite continued US export controls on advanced semiconductor technology, China has been ramping up production of mature chips and continuously expanding its domestic chip industry chain.

Meanwhile, as demand for AI chips, automotive electronics and smartphones continues to grow, China's semiconductor industry is poised to enjoy greater opportunities to expand. China's market size is estimated to have grown the fastest in 2024 in the world, with a year-on-year increase of 20.1 percent, according to data from the World Integrated Circuit Association (WICA) in December. Yang Songqiang, deputy secretary-general of WICA China, stated that "it is expected that the market size of integrated circuits in the Chinese mainland will reach $186.5 billion in 2024, accounting for 30.1 percent of the global semiconductor market share," according to a report by Yicai in December.

Beyond production and demand, technological innovation is also being encouraged and supported. The China Semiconductor Industry Association noted in January that it encouraged companies to adopt effective measures, such as continuous technological innovation, strengthening collaboration across the industry chain, and actively engaging in international cooperation, to collectively promote the semiconductor industry toward a new stage of high-quality development.

China's chip industry still faces numerous challenges, especially in the field of advanced chips. However, the world has witnessed China maintaining a strong development momentum despite facing containment and suppression. 

In this context, the negative effects of the US chip export controls are becoming increasingly evident. US curbs on China's chip industry hinder the development of the global semiconductor industry, and will ultimately backfire and hurt the US itself as well as others in the end, Lin Jian, spokesperson of China's Foreign Ministry, said on Tuesday. 

The author is a reporter with the Global Times. [email protected]