China’s push to develop top-end artificial intelligence microchips is gaining momentum, but analysts say it will struggle to match the technical might of US powerhouse Nvidia within the current decade.
The US has imposed restrictions on exporting advanced chips used to power AI systems to China, citing national security concerns. This move has led China to ramp up its chip industry, with companies like Huawei and Cambricon making significant strides.
China wants chips that policy cannot take away, said Stephen Wu, a former AI software engineer and founder of the Carthage Capital investment fund. However, “full end-to-end parity with Nvidia’s best chips, memory packaging, networking, and software is not guaranteed” by 2030 or even beyond, Wu added. To catch up with Nvidia, China needs to make fast progress on high-bandwidth memory and packaging, which are “the hardest and most complex parts of the chip”, Wu said.
These chips are extremely advanced and tiny, so imagine carving a stone sculpture with a hammer instead of a chisel, Wu explained. Other challenges include building the right software to harness the chips’ power and upgrading manufacturing tools. Nvidia chips are still “the best… to train large language models”, the systems behind generative AI, said Chen Cheng, general manager for AI translation software at tech firm iFLYTEK. Faced with US restrictions, “we overcame that difficulty” by shifting to Chinese-made tech, she said.
The industry consensus is China at least needs five to ten years to catch up, said George Chen of The Asia Group, a view reflected by Dilin Wu, research strategist at Pepperstone. “The future is bright, but not yet,” she said. “It’s maybe a 2030 story”, as “significant gaps remain in terms of performance, and also in terms of energy efficiency and ecosystem maturity”. Public demand for AI services is booming in China, and while government support for new chips is “substantial”, the investment required is “immense”, she added.
Shares in Alibaba, the e-commerce titan ploughing billions of dollars into AI tech, have more than doubled since January. Chinese chip industry leader Huawei will reportedly double output of its top Ascend 910C chip in the next year. The hype has also sharply driven up stocks in the smaller chipmaker Cambricon, sometimes dubbed “China’s Nvidia”. “I think this rally can be sustained”, partly because it is driven by Chinese government policy, Pepperstone’s Wu said.
Nvidia boss Jensen Huang has warned that restrictions on exporting his most cutting-edge semiconductors to China will only fuel the country’s rise. “They’re nanoseconds behind us,” the leather jacket-clad Huang said on a tech business podcast. “So we’ve got to go compete.” Meanwhile, Nvidia is under pressure from both sides, with Beijing barring major Chinese firms from buying a state-of-the-art Nvidia processor made especially for the country, and the company paying 15 percent of revenue from certain AI chip sales in China to the US government.