🔗 Share this article

America has held sway over the global technology market for decades. But, the World's Second Largest Economy seeks to alter that situation.

This economic powerhouse is allocating substantial amounts of money into artificial intelligence (AI) and automated systems. Significantly, Beijing is also directing significant investment toward creating the high-end chips that power these cutting-edge technologies.

Recently, Jensen Huang warned that the Chinese semiconductor industry was just "nanoseconds behind" the American tech sector in processor advancement.

Therefore, will China rival US innovations and reduce its reliance on imported advanced processors?

Following the DeepSeek Launch

The Chinese AI Company DeepSeek created a stir through the tech world in 2024 when it unveiled a competitor to OpenAI's ChatGPT.

This revelation by a relatively unknown startup was impressive for several reasons, not least because the company reported it was more economical to train than top artificial intelligence systems.

Reports indicated to have been built using far fewer advanced processors than its competitors, and its launch briefly reduced the chip giant's stock price.

And, progress in the Chinese technology industry has grown. This year, some of the country's leading technology companies have made it clear that they intend to compete with Nvidia and become the primary high-end semiconductor providers for domestic firms.

Earlier this year, official sources reported that a new chip introduced by Alibaba can rival the performance of Nvidia's H20 chips while using less energy. H20s are scaled-down chips made for the Chinese market under American trade restrictions.

Another Chinese Tech Giant also revealed what it called its strongest processors to date, along with a three-year plan to dispute Nvidia's leading position of the artificial intelligence sector.

This major firm also stated it would make its designs and computer programs accessible to the general audience in the country in an initiative to draw companies away from their dependence on US products.

Additional semiconductor firms in China have also secured significant deals with large corporations in the nation. One such company is supplying high-end processors for organizations like state-owned telecoms operator China Unicom.

Another hotly-tipped potential challenger to the chip giant is headquartered in Beijing Cambricon Technologies.

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

The Tech Conglomerate Tencent, which operates the all-in-one platform WeChat, is another notable tech giant that has responded to the government’s call to use domestic processors.

Additionally, there has been no lack of government-supported events, showcasing domestic tech firms in a bid to draw in funding sources.

"The competition has clearly arrived," a spokesperson for Nvidia stated in reply to queries about the recent progress made by China's semiconductor companies.

"Customers will choose the best technology stack for operating the world's most popular commercial applications and open-source models. We'll persist in our efforts to earn the confidence and support of leading programmers everywhere."

Yet, some experts have warned that assertions made by China's semiconductor producers should be taken with a pinch of salt due to a absence of open information and standardized performance measures.

Chinese processors perform similarly to the US in forecasting applications but fall short in complex analytics, noted computer scientist Jawad Haj-Yahya, who has evaluated both processors from the US and China.

"The difference is evident and it is certainly narrowing. But, it is unlikely they will close it in the near future."

Where China Leads - and Lags

On a industry discussion in last month, Nvidia's Jensen Huang emphasized the strengths of the Chinese technology industry, attributing its hardworking and vast talent pool, fierce local rivalry and advancements in semiconductor production.

"This is a vibrant innovative, advanced, contemporary sector," he remarked, urging the US to vie "for its survival."

This evaluation is expected to be welcomed by officials in the Chinese capital.

China has consistently aimed to become a worldwide frontrunner in technology, in part to reduce its reliance on the West.

For years, China has poured significant resources into what the country's leader calls "advanced growth", which covers industries from renewables to artificial intelligence.

Prior to US President Donald Trump's return to the US presidency, China had allocated billions of dollars as part of its initiatives to shift its large economic system from the "global manufacturing hub" for standard goods to a home of cutting-edge sectors.

An ongoing tariffs war with Trump's America has only made that mission more urgent.

Xi has vowed to make his country more self-reliant and not rely on "external assistance."

The Nvidia CEO has also warned that the United States should trade freely with the Asian nation or face the possibility of handing it the advantage in the AI race.

This comes against a context of Beijing exerting more scrutiny on Nvidia as it launched an investigation into market dominance into the company recently.

But, China's state-led approach can also be an barrier to creativity if everyone in the sector only concentrates on a "shared goal", said computing professor Chia-Lin Yang from National Taiwan University.

It can make it harder for innovative concepts to break the mould, she added.

The Chinese semiconductor sector has also not fully addressed criticism that its offerings can be more challenging to use than those of competitors from the West like the industry leader.

The Professor thinks these issues can quickly be solved by China's huge number of skilled tech industry workers.

"One should not underestimate China's ability to close the gap."

'Bargaining Chip' for China

She described the latest reports from China about the chip sector as a "negotiating tool" in its months-long tariffs negotiations with the US.

Beijing aims to compel US authorities into providing its high-tech tools or lose its standing in such a large market, said Dr Jawad.

These announcements project capability on behalf of China, even though it is {