Technology

China’s racing to build its AI chip ecosystem as U.S. curbs bite. Here’s how its supply chain stacks up

Published

3 days ago

June 12, 2025

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Chip engineer handling a wafer.

Sinology | Moment | Getty Images

With the U.S. restricting China from buying advanced semiconductors used in artificial intelligence development, Beijing is placing hopes on domestic alternatives such as Huawei.

The task has been made more challenging by the fact that U.S. curbs not only inhibit China’s access to the world’s most advanced chips, but also restrict availing technology vital for creating an AI chip ecosystem.

Those constraints span the entire semiconductor value chain, ranging from design and manufacturing equipment used to produce AI chips to supporting elements such as memory chips.

Beijing has mobilized tens of billions of dollars to try to fill those gaps, but while it has been able to “brute force” its way into some breakthroughs, it still has a long way to go, according to experts.

“U.S. export controls on advanced Nvidia AI chips have incentivized China’s industry to develop alternatives, while also making it more difficult for domestic firms to do so,” said Paul Triolo, partner and senior vice president for China at advisory firm DGA-Albright Stonebridge Group.

Here’s how China stacks up against the rest of the world in four key segments needed to build AI chips.

AI chip design

Nvidia is regarded as the world’s leading AI chip company, but it’s important to understand that it doesn’t actually manufacture the physical chips that are used for AI training and computing.

Rather, the company designs AI chips, or more precisely, graphics processing units. Orders of the company’s patented GPU designs are then sent to chip foundries — manufacturers that specialize in the mass production of other companies’ semiconductor products.

While American competitors such as AMD and Broadcom offer varying alternatives, GPU designs from Nvidia are widely recognized as the industry standard. The demand for Nvidia chips is so strong that Chinese customers have continued to buy any of the company’s chips they can get their hands on.

But Nvidia is grappling with Washington’s tightening restrictions. The company revealed in April that additional curbs had prevented it from selling its H20 processor to Chinese clients.

Nvidia’s H20 was a less sophisticated version of its H100 processor, designed specifically to skirt previous export controls. Nevertheless, experts say, it was still more advanced than anything available domestically. But China hopes to change that.

In response to restrictions, more Chinese semiconductor players have been entering the AI processor arena. They’ve included a wide array of upstarts, such as Enflame Technology and Biren Technology, seeking to soak up billions of dollars in GPU demand left by Nvidia.

But no Chinese firm appears closer to providing a true alternative to Nvidia than Huawei’s chip design arm, HiSilicon.

Huawei’s most advanced GPU in mass production is its Ascend 910B. The next-generation Ascend 910C was reportedly expected to begin mass shipments as early as May, though no updates have emerged.

Dylan Patel, founder, CEO and chief analyst at SemiAnalysis, told CNBC that while the Ascend chips remain behind Nvidia, they show that Huawei has been making significant progress.

“Compared to Nvidia’s export-restricted chips, the performance gap between Huawei and the H20 is less than a full generation. Huawei is not far behind the products Nvidia is permitted to sell into China,” Patel said.

He added that the 910B was two years behind Nvidia as of last year, while the Ascend 910C is only a year behind.

But while that suggests China’s GPU design capabilities have made great strides, design is just one aspect that stands in the way of creating a competitive AI chip ecosystem.

AI chip fabrication

To manufacture its GPUs, Nvidia relies on TSMC, the world’s largest contract chip foundry, which produces most of the world’s advanced chips.

TSMC complies with U.S. chip controls and is also barred from taking any chip orders from companies on the U.S. trade blacklist. Huawei was placed on the list in 2019.

That has led to Chinese chip designers like Huawei to enlist local chip foundries, the largest of which is SMIC.

SMIC is far behind TSMC — it’s officially known to be able to produce 7-nanometer chips, requiring less advance tech than TSMC’s 3-nanometer production. Smaller nanometer sizes lead to greater chip processing power and efficiency.

There are signs that SMIC has made progress. The company is suspected to have been behind a 5-nanometer 5G chip for Huawei’s Mate 60 Pro, which had rocked confidence in U.S. chip controls in 2023. The company, however, has a long way to go before it can mass-produce advanced GPUs in a cost-efficient manner.

According to independent chip and technology analyst Ray Wang, SMIC’s known operation capacity is dwarfed by TSMC’s.

“Huawei is a very good chip design company, but they are still without good domestic chipmakers,” Wang said, noting that Huawei is reportedly working on its own fabrication capabilities.

But the lack of key manufacturing equipment stands in the way of both companies.

Advanced Chip equipment

SMIC’s ability to fulfill Huawei’s GPU requirements is limited by the familiar problem of export controls, but in this case, from the Netherlands.

While Netherlands may not have any prominent semiconductor designers or manufacturers, it’s home to ASML, the world’s leading supplier of advanced chipmaking equipment — machines that use light or electron beams to transfer complex patterns onto silicon wafers, forming the basis of microchips.

In accordance with U.S. export controls, the country has agreed to block the sale of ASML’s most advanced ultraviolet (EUV) lithography machines. The tools are critical to making advanced GPUs at scale and cost-effectively.

EUV is the most significant barrier for Chinese advanced chip production, according to Jeff Koch, an analyst at SemiAnalysis. “They have most of the other tooling available, but lithography is limiting their ability to scale towards 3nm and below process nodes,” he told CNBC.

SMIC has found methods to work around lithography restrictions using ASML’s less advanced deep ultraviolet lithography systems, which have seen comparatively fewer restrictions.

Through this “brute forcing,” producing chips at 7 nm is doable, but the yields are not good, and the strategy is likely reaching its limit, Koch said, adding that “at current yields it appears SMIC cannot produce enough domestic accelerators to meet demand.”

SiCarrier Technologies, a Chinese company working on lithography technology, has reportedly been linked to Huawei.

But imitating existing lithography tools could take years, if not decades, to achieve, Koch said. Instead, China is likely to pursue other technologies and different lithography techniques to push innovation rather than imitation, he added.

AI memory components

While GPUs are often identified as the most critical components in AI computing, they’re far from the only ones. In order to operate AI training and computing, GPUs must work alongside memory chips, which are able to store data within a broader “chipset.”

In AI applications, a specific type of memory known as HBM has become the industry standard. South Korea’s SK Hynix has taken the industry lead in HBM. Other companies in the field include Samsung and U.S.-based Micron.

“High bandwidth memory at this stage of AI progression has become essential for training and running AI models,” said analyst Wang.

As with the Netherlands, South Korea is cooperating with U.S.-led chip restrictions and began complying with fresh curbs on the sale of certain HBM memory chips to China in December.

In response, Chinese memory chip maker ChangXin Memory Technologies, or CXMT, in partnership with chip-packaging and testing company Tongfu Microelectronics, is in the early stages of producing HBM, according to a report by Reuters.

According to Wang, CXMT is expected to be three to four years behind global leaders in HBM development, though it faces major roadblocks, including export controls on chipmaking equipment.

SemiAnalysis estimated in April that CXMT remained a year away from ramping any reasonable volume.

Chinese foundry Wuhan Xinxin Semiconductor Manufacturing is reportedly building a factory to produce HBM wafers. A report from SCMP said that Huawei Technologies had partnered with the firm in producing HBM chips, although the companies did not confirm the partnership.

Huawei has leaned on HBM stockpiles from suppliers like Samsung for use in their Ascend 910C AI processor, SemiAnalysis said in an April report, noting that while the chip was designed domestically, it still relies on foreign products obtained prior to or despite restrictions.

“Whether it be HBM from Samsung, wafers from TSMC, or equipment from America, Netherlands, and Japan, there is a big reliance on foreign industry,” SemiAnalysis said.

Technology

Nvidia-mania took over Europe this week. Here’s what I learned from Jensen Huang

Published

12 hours ago

June 14, 2025

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Nvidia-mania took over Europe this week. Here's what I learned from Jensen Huang

Jensen Huang, co-founder and chief executive officer of Nvidia Corp., left, and Emmanuel Macron, France’s president at the 2025 VivaTech conference in Paris, France, on Wednesday, June 11, 2025.

Nathan Laine | Bloomberg | Getty Images

Nvidia boss Jensen Huang has been on a tour of Europe this week, bringing excitement and intrigue to everywhere he visited.

His message was clear — Nvidia is the company that can help Europe build its artificial intelligence infrastructure so the region can take control of its own destiny with the transformative technology.

I’ve been in London and Paris this week following Huang around as he met with U.K. Prime Minister Keir Starmer, French President Emmanuel Macron, journalists, fans, analysts and gave a keynote at Nvidia’s GTC event in the capital of France.

Here’s the what I saw and the key things I learned.

The draw of Huang is huge

Huang is truly the current rockstar of the tech world.

At London Tech Week, the lines were long and the auditorium packed to hear him speak.

The GTC event in Paris was full too. It was like going to a music concert or sporting event. There were GTC Paris T-shirts on the back of every chair and even a merchandise store.

Nvidia GTC in Paris on 11 June 2025

Arjun Kharpal

The aura of Huang really struck me when, after a question-and-answer session with him and a room full of attendees, most people lined up to take pictures or selfies with him.

Macron and Starmer both wanted to be seen on stage with him.

Nvidia positions itself as Europe’s AI hope

Nvidia’s key product is its graphics processing units (GPU) that are used to train and execute AI applications.

But Huang has positioned Nvidia as more than a chip company. During the week, he described Nvidia as an infrastructure firm. He also said AI should be seen as infrastructure like electricity.

His pitch to all countries was that Nvidia could be the company that will help countries build out that infrastructure.

“We believe that in order to compete, in order to build a meaningful ecosystem, Europe needs to come together and build capacity that is joint,” Huang said during a speech at the Viva Tech conference in Paris on Wednesday.

Jensen Huang, CEO of Nvidia, speaks during the Viva Technology conference dedicated to innovation and startups at Porte de Versailles exhibition center in Paris, France, June 11, 2025.

Gonzalo Fuentes | Reuters

One of the most significant partnerships announced this week is between French startup Mistral and Nvidia to build a so-called AI cloud using the latter’s GPUs.

Huang spoke a lot during the week about “sovereign AI” — the concept of building data centers within a country’s borders that services its population rather than relying on servers located overseas. Among European policymakers and companies, this has been an important topic.

Huang also heaped praise on the U.K., France and Europe more broadly when it came to their potential in the AI industry.

China still behind but catching up

On Thursday, Huang decided to do a tour of Nvidia’s booth and I managed to catch him to get a few words on CNBC’s “Squawk Box Europe.”

A key topic of that discussion was China. Nvidia has not been able to sell its most advanced chips to China because of U.S. export controls and even less sophisticated semiconductors are being blocked. In its last quarterly results, Nvidia took a $4.5 billion hit on unsold inventory.

I asked Huang about how China was progressing with AI chips, in particular referencing Huawei, the Chinese tech giant that is trying to make semiconductor products to rival Nvidia.

Huang said Huawei is a generation behind Nvidia. But because there is lots of energy in China, Huawei can just use more chips to get results.

Nvidia CEO: Huawei ‘has got China covered’ if the U.S. doesn’t participate

“If the United States doesn’t want to partake, participate in China, Huawei has got China covered, and Huawei has got everybody else covered,” Huang said.

In addition, Huang is concerned about the strategic importance of U.S. companies not having access to China.

“It’s even more important that the American technology stack is what AI developers around the world build on,” Huang said.

Just reading between the lines somewhat — Huang sees a world where Chinese AI tech advances. Some countries may decide to build their AI infrastructure with Chinese companies rather than American. That in turn could give Chinese companies a chance to be in the AI race.

Quantum, robotics and driverless is the future

Huang often uses public appearances to talk about the future.

I asked him about some of those areas he’s bullish on like robotics and driverless cars, technology that Nvidia’s products can power.

Huang told me this will be the “decade of” autonomous vehicles and robotics.

Nvidia boss Jensen Huang delivers a speech on stage talking about robotics.

Arjun Kharpal | CNBC

During his keynote at GTC Paris on Wednesday, he also address quantum computing, saying the technology is reaching “an inflection point.”

Quantum computers are widely believed to be able to solve complex problems that classic computers can’t. This could include things like discovering new drugs or materials.

Technology

Tesla faces protests in Austin over Musk’s robotaxi plans

Published

18 hours ago

June 13, 2025

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Tesla faces protests in Austin over Musk's robotaxi plans

In an aerial view, a Tesla showroom at 12845 N. US 183 Highway Service Road is seen after police were called for a suspicious device in Austin, Texas, on March 24, 2025.

Brandon Bell | Getty Images

With Elon Musk looking to June 22 as his tentative start date for Tesla’s pilot robotaxi service in Austin, Texas, protesters are voicing their opposition.

Public safety advocates and political protesters, upset with Musk’s work with the Trump administration, joined together in downtown Austin on Thursday to express their concerns about the robotaxi launch. Members of the Dawn Project, Tesla Takedown and Resist Austin say that Tesla’s partially automated driving systems have safety problems.

Tesla sells its cars with a standard Autopilot package, or a premium Full Self-Driving option (also known as FSD or FSD supervised), in the U.S. Automobiles with these systems, which include features like automatic lane keeping, steering and parking, have been involved in dozens of collisions, some fatal, according to data tracked by the National Highway Traffic Safety Administration.

Tesla’s robotaxis, which Musk showed off in a video clip on X earlier this week, are new versions of the company’s popular Model Y vehicles, equipped with a future release of Tesla’s FSD software. That “unsupervised” FSD, or robotaxi technology, is not yet available to the public.

Tesla critics with The Dawn Project, which calls itself a tech-safety and security education business, brought a version of Model Y with relatively recent FSD software (version 2025.14.9) to show residents of Austin how it works.

In their demonstration on Thursday, they showed how a Tesla with FSD engaged zoomed past a school bus with a stop sign held out and ran over a child-sized mannequin that they put in front of the vehicle.

Dawn Project CEO Dan O’Dowd also runs Green Hills Software, which sells technology to Tesla competitors, including Ford and Toyota.

Stephanie Gomez, who attended the demonstration, told CNBC that she didn’t like the role Musk had been playing in the government. Additionally, she said she has no confidence in Tesla’s safety standards and said there’s been a lack of transparency from Tesla regarding how its robotaxis will work.

Another protester, Silvia Revelis, said she also opposed Musk’s political activity, but that safety is the biggest concern.

“Citizens have not been able to get safety testing results,” she said. “Musk believes he’s above the law.”

Tesla didn’t immediately respond to a request for comment.

— Todd Wiseman contributed to this report.

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Technology

Anne Wojcicki to buy back 23andMe and its data for $305 million

Published

20 hours ago

June 13, 2025

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Anne Wojcicki to buy back 23andMe and its data for 5 million

23andMe founder Anne Wojcicki speaks during a House Committee on Oversight and Government Reform hearing in Washington, D.C., on June 10, 2025.

Andrew Harnik | Getty Images

Anne Wojcicki, the co-founder and former CEO of 23andMe, has regained control over the embattled genetic testing company after her new nonprofit, TTAM Research Institute, outbid Regeneron Pharmaceuticals, the company announced Friday.

TTAM will acquire substantially all of 23andMe’s assets for $305 million, including its Personal Genome Service and Research Services business lines as well as telehealth subsidiary Lemonaid Health. It’s a big win for Wojcicki, who stepped down from her role as CEO when 23andMe filed for Chapter 11 bankruptcy protection in March.

Last month, Regeneron announced it would purchase most of 23andMe’s assets for $256 million after it came out on top during a bankruptcy auction. But Wojcicki submitted a separate $305 million bid through TTAM and pushed to reopen the auction. TTAM is an acronym for the first letters of 23andMe, according to The Wall Street Journal.

“I am thrilled that TTAM Research Institute will be able to continue the mission of 23andMe to help people access, understand and benefit from the human genome,” Wojcicki said in a statement.

23andMe gained popularity because of its at-home DNA testing kits that gave customers insight into their family histories and genetic profiles. The five-time CNBC Disruptor 50 company went public in 2021 via a merger with a special purpose acquisition company. At its peak, 23andMe was valued at around $6 billion.

The company struggled to generate recurring revenue and stand up viable research and therapeutics businesses after going public, and it has been plagued by privacy concerns since hackers accessed the information of nearly seven million customers in 2023.

TTAM’s acquisition is still subject to approval by the U.S. Bankruptcy Court for the Eastern District of Missouri.