China Still Gorges on U.S. Chips in Trump Era as Huawei Struggles

Why It Matters

The data shows that U.S. chip technology still underpins China’s AI ambitions, limiting the effectiveness of geopolitical restrictions, while Huawei’s lagging performance highlights the challenges of building a self‑sufficient semiconductor ecosystem.

Key Takeaways

• US semiconductor shipments to China hit $104 billion, only 4% down YoY
• Huawei's ICT infrastructure growth fell to 2.2% in 2023, down from 22.4%
• Nvidia's China sales rose to $19.7 billion, up from $5.8 billion in 2022
• Huawei's Ascend chips lag Nvidia GPUs, limiting domestic AI compute capacity
• Analysts doubt Chinese cloud firms can source enough local chips for AI

Pulse Analysis

The Trump administration’s decision to allow companies like Nvidia to sell advanced chips to Chinese customers, even with a 25% revenue‑share clause, kept the flow of U.S. semiconductor technology into China remarkably high. In the most recent fiscal year, 15 leading U.S. chipmakers earned roughly $104 billion from Chinese sales—just a 4% dip from the previous year but a 17% increase over the 2021‑22 period. This sustained revenue stream underscores how deeply intertwined American chip design expertise is with China’s burgeoning AI and data‑center ambitions, despite broader geopolitical tensions.

Huawei’s 2023 annual report paints a starkly different picture for the Chinese tech giant. Its ICT infrastructure segment, which includes the Ascend AI processor line, recorded a meager 2.2% growth, a sharp fall from the 22.4% surge seen the year before. Ascend chips, touted as China’s answer to Nvidia GPUs, have yet to achieve meaningful market traction, leaving domestic AI compute largely dependent on imported silicon. By contrast, Nvidia’s sales to China climbed to $19.7 billion, up from $5.8 billion in 2022, while the company posted a 60% operating margin globally—far outpacing Huawei’s 11% margin.

The strategic implications are profound. Analysts argue that Chinese cloud providers such as Alibaba, ByteDance and Tencent will continue to face a supply‑side bottleneck, forcing them to look abroad for high‑performance AI hardware. Skepticism about the reported pre‑orders of Huawei chips for DeepSeek’s V4 model reflects broader doubts about China’s ability to achieve semiconductor self‑reliance in the near term. As AI workloads expand, the gap between U.S. chipmakers and domestic Chinese alternatives is likely to widen, shaping investment decisions and policy debates on technology security for years to come.