By South China Morning Post
Publication Date: 2026-01-25 23:15:00
The geopolitical tug of war over artificial intelligence between the United States and China has created an intriguing situation. With the US Department of Commerce approving the sale of the H200, Nvidia’s second-most-advanced semiconductor, to Chinese firms, people might think China would welcome it. Instead, Beijing is encouraging a boycott to get domestic tech firms to use Chinese-made chips.
America’s “small yard, high fence” strategy to restrict tech transfer to China has given way to Washington, under President Donald Trump, taking a 25 per cent cut on Nvidia’s and other chipmakers’ sales of chips of comparable grades. But it seems China is returning the favour with its own “small yard, high fence” plan.
Washington was convinced by Nvidia and other chip industry leaders that tough US restrictions actually forced China to rapidly develop its domestic chip industry along with fully integrated supply chains. While their argument was self-serving, given the vast Chinese market, it was not untrue. US export controls have proved to be counterproductive; China’s drive for chip manufacturing self-sufficiency advanced so rapidly last year that even policymakers were pleasantly surprised. The ratio of domestically developed semiconductor equipment surged to 35 per cent by the year’s end, up from 25 per cent in 2024 and surpassing Beijing’s initial target of 30 per cent.
China is succeeding in building a semiconductor industry favouring domestic suppliers…
