🔗 Share this article

The US has long dominated the global technology market for decades. However, China aims to alter that situation.

The nation is pouring massive sums of capital into AI technologies and automated systems. Significantly, Beijing is also channeling significant funding toward producing the high-end chips that power these innovative technologies.

Recently, Jensen Huang warned that China was just "close behind" the US in processor advancement.

Therefore, will Beijing match US innovations and reduce its reliance on foreign high-end chips?

Following the DeepSeek Launch

China's DeepSeek created a stir through the tech world in 2024 when it introduced a alternative to OpenAI's ChatGPT.

The announcement by a little-known company was impressive for multiple factors, not least because the firm claimed it required less funding to develop than leading AI models.

It was said to have been created using far fewer advanced processors than its competitors, and its release briefly reduced Nvidia's market value.

Moreover, advancement in China's tech sector has grown. Recently, some of the country's leading technology companies have made it clear that they intend to compete with Nvidia and emerge as the main advanced chip suppliers for domestic firms.

In September, official sources announced that a new chip introduced by Alibaba can match the performance of Nvidia's H20 chips while using less energy. H20s are modified processors made for the China under US export rules.

Another Chinese Tech Giant also introduced what it called its strongest processors to date, along with a multi-year strategy to dispute Nvidia's dominance of the AI market.

This major firm also announced it would release its blueprints and computer programs accessible to the public in China in an attempt to draw firms away from their dependence on American technology.

Other Chinese chip developers have also secured significant deals with big businesses in the country. MetaX is supplying advanced chips for entities like government-run telecommunications firm a major Chinese carrier.

A further highly anticipated possible competitor to the chip giant is Beijing-based a rising semiconductor firm.

The company's stock have surged in price over the recent quarter as investors speculate that it will profit from the government's initiative for Chinese firms to use locally produced high-end chips.

The Tech Conglomerate Tencent, which owns the super app WeChat, is another prominent technology leader that has responded to the official directive to use Chinese chips.

Additionally, there has been no shortage of government-supported trade shows, promoting domestic tech firms in a effort to attract investors.

"The competition has undeniably emerged," a spokesperson for Nvidia stated in response to questions about the latest developments made by Chinese chip firms.

"Users will choose the most effective solutions for running the world's most popular business software and open-source models. We'll continue to work to gain the confidence and support of mainstream developers worldwide."

Yet, certain analysts have warned that claims made by Chinese chipmakers should be viewed skeptically due to a lack of open information and standardized performance measures.

China's semiconductors are comparable to the American chips in forecasting applications but lag behind in complex analytics, noted computer scientist a researcher, who has tested both processors from the US and China.

"The gap is evident and it is surely narrowing. However, I don't think it's something they will catch up on in the short-term."

China's Strengths and Weaknesses

During a technology and business podcast in last month, Nvidia's Jensen Huang highlighted the strengths of the Chinese technology industry, crediting its hardworking and large talent pool, fierce domestic competition and progress in chipmaking.

"It represents a vibrant innovative, high-tech, modern industry," he remarked, urging the US to vie "for its survival."

His assessment is expected to be welcomed by officials in the Chinese capital.

China has long vied to become a global leader in tech, partly to lessen its reliance on the West.

Over time, the nation has invested heavily into what President Xi Jinping calls "high-quality development", which covers industries from renewables to AI.

Prior to the reappearance of Donald Trump to the US presidency, the Chinese government had allocated billions of USD as part of its initiatives to shift its vast economy from the "global manufacturing hub" for basic products to a center of advanced sectors.

An ongoing tariffs war with the United States under Trump has only rendered this goal more pressing.

The Chinese President has pledged to make his country more self-reliant and not depend on "anyone's gifts."

The Nvidia CEO has also warned that the United States should trade freely with the Asian nation or risk handing it the advantage in the artificial intelligence competition.

This occurs against a context of Chinese authorities exerting more pressure on Nvidia as it initiated an anti-monopoly probe into the company last month.

But, the government-directed strategy can also be an barrier to creativity if everyone in the sector only concentrates on a "shared goal", noted computing professor Chia-Lin Yang from National Taiwan University.

It can make it more difficult for disruptive ideas to break the mould, she added.

China's chip industry has also yet to overcome criticism that its offerings can be less user-friendly than those of competitors from the West like the industry leader.

Prof Yang believes these challenges can soon be solved by China's huge number of skilled tech industry workers.

"One should not downplay the capability of China to catch up."

'Bargaining Chip' for China

The expert characterized the latest reports from China about the semiconductor industry as a "bargaining chip" in its months-long trade discussions with the United States.

Chinese officials seeks to pressure US authorities into selling its advanced equipment or lose its position in such a large market, stated Dr Jawad.

Such reports demonstrate strength on behalf of China, even though it is {