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

Core Insights - The U.S. export restrictions on advanced semiconductors are pushing China to develop domestic alternatives, with Huawei being a key player in this effort [1][3][6] AI Chip Design - Nvidia is recognized as the leading AI chip designer, but it does not manufacture the chips itself; it relies on foundries for production [5] - Despite U.S. restrictions, demand for Nvidia chips remains high among Chinese customers, although Nvidia has faced challenges in selling its H20 processor to China [6][7] - Huawei's HiSilicon is making progress in GPU design, with its Ascend 910B and upcoming Ascend 910C chips showing significant advancements, though still behind Nvidia [9][10] AI Chip Fabrication - Nvidia's manufacturing is primarily done by TSMC, which is compliant with U.S. export controls, limiting Huawei's access to advanced chip production [11][12] - SMIC, China's largest foundry, is behind TSMC in technology, officially capable of producing 7-nanometer chips but suspected of working on a 5-nanometer chip for Huawei [13] - Huawei is reportedly working on its own fabrication capabilities, but lacks essential manufacturing equipment [14] Advanced Chip Equipment - Export controls from the Netherlands restrict SMIC's access to advanced lithography machines from ASML, which are crucial for producing advanced GPUs [15][16] - SMIC has attempted to circumvent these restrictions using less advanced lithography systems, but this approach has limitations [17] - Chinese companies like SiCarrier Technologies are exploring alternative lithography technologies, but achieving comparable capabilities may take years [18] AI Memory Components - High Bandwidth Memory (HBM) is essential for AI applications, with South Korean companies like SK Hynix leading the market [19][20] - Chinese firms such as ChangXin Memory Technologies are in the early stages of HBM production but face significant challenges, including export controls [21][22] - Huawei relies on foreign HBM supplies for its Ascend 910C processor, highlighting the ongoing dependence on international suppliers despite domestic advancements [24]