US-China AI
Updated
Summary
US-China AI competition is the contest between the two countries over who builds and controls the most capable AI and the chips, tools and know-how it depends on. The United States uses export controls on AI chips, chipmaking equipment and high-bandwidth memory to slow China's access to frontier compute. Since January 2026 it has also run a narrow, conditioned licence window for H200-class chips, paired with a 25% tariff. China answers with export controls of its own (rare earths and minor metals since 2023-2025, and since 2026-10-16 a draft list of AI know-how), and with state plans that push domestic chips such as Huawei's Ascend line. A trade truce since November 2025 has paused the mineral controls and one U.S. rule, but the core chip curbs remain in force.
Key numbers
U.S. case-by-case licence window for China (H200-class): TPP < 21,000 and DRAM bandwidth < 6,500 GB/s; China exports capped at 50% of U.S. aggregate TPP (as of 2026-01-15). Source: public-inspection.federalregister.gov
U.S. tariff on H200/MI325X-class chips: 25% (supply-chain build-out exemptions) (as of 2026-01-14). Source: whitehouse.gov
Nvidia Data Center Hopper shipments to China, Q1 FY2027 vs Q1 FY2026: None vs $4.6 billion (as of 2026-04-26). Source: sec.gov
Nvidia H20 charge (Q1 FY2026) / H20 revenue under licences: $4.5 billion / about $60 million (as of 2026-01-25). Source: sec.gov
Nvidia Data Center revenue, Q2 FY2027 (China data center compute in outlook): $89.0 billion (none assumed) (as of 2026-08-26). Source: nvidianews.nvidia.com
TSMC revenue from China, share of total: 5% in Q3 2026 (6% in Q2) (as of 2026-10-15). Source: investor.tsmc.com
ASML China share of 2026 business (CFO expectation) / 2026 sales guidance: About 20% / EUR 44-45 billion (as of 2026-10-14). Source: investor.asml.com
China draft tech-export catalogue additions (No. 48): 40 items (23 AI); 14 prohibited, 26 restricted (as of 2026-10-16). Source: mofcom.gov.cn
China generative AI services filed with CAC / apps registered: 1,112 / 731 (as of 2026-08-31). Source: cac.gov.cn
China rare-earth rule foreign-content threshold (suspended to 2026-11-10): 0.1% of value (as of 2025-10-09). Source: mofcom.gov.cn
Huawei Atlas 950 SuperPoD: Up to 8,192 Ascend 950DT; 8 EFLOPS FP8 (as of 2025-09-18). Source: huawei.com
BIS December 2024 package: tool types / Entity List additions: 24 equipment types + 3 software tools / 140 entities (as of 2024-12-02). Source: bis.gov
Timeline
2026-10-16 — MOFCOM and MOST propose adding 40 technologies, 23 of them AI, to China's export-restricted catalogue and require interim registration. (Source: mofcom.gov.cn)
2026-10-14 — ASML says planned 2027-28 tool supply will not fully meet customer demand; its CFO expects China at about 20% of 2026 business. (Source: sec.gov)
2026-09-28 — MOFCOM says the Kuala Lumpur U.S.-China arrangement is extended to 2027-01-10 and the next AI dialogue is due by end-November. (Source: mofcom.gov.cn)
2026-09-25 — Xi Jinping's U.S. state visit: the sides set up a 'Super Intelligence' dialogue; no chip or export-control terms. (Source: whitehouse.gov)
2026-09-17 — Huawei pulls the Ascend 960DT forward to Q1 2027 and moves to one chip generation a year. (Source: huawei.com)
2026-09-15 — MIIT and NDRC publish a 2026-2030 electronics plan calling for full-chain breakthroughs in integrated circuits. (Source: english.www.gov.cn)
2026-09-14 — CAC: 1,112 generative AI services filed in China as of 2026-08-31. (Source: cac.gov.cn)
2026-08-26 — Nvidia's Q2 FY2027 outlook still assumes no China data center compute revenue. (Source: nvidianews.nvidia.com)
2026-05-31 — BIS guidance: licences are still required for advanced chips sold to China-headquartered firms anywhere. (Source: bis.gov)
2026-05-20 — Nvidia reports no Data Center Hopper shipments to China in Q1 FY2027, against $4.6 billion a year earlier. (Source: sec.gov)
2026-01-15 — BIS rule moves H200-class chip exports to China to case-by-case review, with a 50% volume cap and U.S. testing. (Source: public-inspection.federalregister.gov)
2026-01-14 — White House imposes a 25% tariff on H200/MI325X-class chips. (Source: whitehouse.gov)
2025-11-09 — MOFCOM suspends its gallium, germanium and antimony curbs on the U.S. until 2026-11-27. (Source: mofcom.gov.cn)
2025-11-07 — MOFCOM suspends its October 2025 rare-earth and related controls until 2026-11-10. (Source: mofcom.gov.cn)
2025-11-01 — U.S.-China deal: U.S. pauses the affiliates rule for a year; China suspends rare-earth controls and ends chip-firm probes. (Source: whitehouse.gov)
2025-10-09 — MOFCOM extends rare-earth controls to foreign goods with 0.1% Chinese content and to advanced-chip end uses. (Source: mofcom.gov.cn)
2025-09-29 — BIS extends Entity List restrictions to firms majority-owned by listed entities. (Source: bis.gov)
2025-09-02 — BIS removes Intel, Samsung and SK hynix fabs in China from fast-track VEU status. (Source: public-inspection.federalregister.gov)
2025-07-23 — White House publishes America's AI Action Plan. (Source: whitehouse.gov)
2025-05-13 — Commerce rescinds the AI Diffusion Rule and warns industry about Huawei Ascend chips. (Source: bis.gov)
Key actors and links
United States (country:united-states): Sets chip and tool export controls, the H200-class licence window and the 25% chip tariff.
China (country:china): Target of U.S. controls; answers with mineral and technology export controls and a domestic chip push.
NVIDIA (actor:nvidia): Says it is 'effectively foreclosed' from China's data center compute market.
NVIDIA (asset:stock-nvda): Guidance assumes no China data center compute revenue, so licence changes sit outside it.
Taiwan (country:taiwan): Home of TSMC, whose China revenue share was 5% in Q3 2026.
Netherlands (Kingdom of the) (country:netherlands-kingdom-of-the): Home of ASML; its CFO expects China at about 20% of 2026 business.
South Korea (country:south-korea): Samsung and SK hynix fabs in China lost fast-track U.S. tool authorisations in 2025.
Rare earth elements (commodity:rare-earth-elements): China's main counter-lever; its October 2025 controls are suspended to 2026-11-10.
Gallium (commodity:gallium): Covered by China's suspended U.S. licensing clause (to 2026-11-27).
Artificial Intelligence (concept:artificial-intelligence): The strategic technology at stake; China now proposes AI know-how export controls.
AI productivity (theme:ai-productivity): Controls shape where AI compute is built and who supplies it.
Productivity growth (theme:productivity-growth): AA link: compute access is one input to AI-driven productivity in each economy (inference).
Trade fragmentation / tariffs (theme:trade-fragmentation): Chip, mineral and technology controls are a core front of trade fragmentation.
Equities (market:equities): Chip and tool makers' China exposure moves with each control or licence decision.
Why it matters now
The chip side has largely closed for U.S. vendors. Nvidia says it was 'effectively foreclosed' from China's data center compute market. It shipped no data center Hopper chips to China in its April 2026 quarter, against $4.6 billion a year earlier, and its outlook still assumes no China data center compute revenue. Washington opened a narrow window: since 2026-01-15, BIS reviews H200-class exports to China case by case. Each export needs U.S. third-party testing, and China volume is capped at 50% of what U.S. customers receive. The chips also face a 25% tariff. Nvidia says it received a licence for small H200 amounts in February 2026; H200 revenue since then is UNKNOWN. Suppliers' China exposure now varies widely: TSMC's China revenue share was 5% in Q3 2026, while ASML's CFO expects China at about 20% of ASML's 2026 business.
AA reads the mechanism as running both ways (inference). U.S. controls cap China's access to leading-edge chips and tools. That pushes Chinese buyers to local suppliers, and Beijing backs them with plans such as 'AI Plus' and an integrated-circuit drive. Huawei says it pulled its Ascend 960DT forward to Q1 2027. China's levers are inputs and know-how. Its October 2025 rare-earth rule reached foreign goods with 0.1% Chinese content and targeted advanced-chip uses; it is suspended to 2026-11-10. On 2026-10-16 Beijing proposed export controls on 23 AI technologies, while saying most AI stays freely exportable. The truce has dated cliffs. The U.S. affiliates-rule pause ends 2026-11-09 absent extension, China's mineral suspensions end 2026-11-10 and 2026-11-27, and MOFCOM says the wider arrangement now runs to 2027-01-10. No matching U.S. notice was found.
Risks and open questions
Bull case: For the U.S. side: controls hold and are enforced, the H200-class window stays capped and tested, and tool shortages (ASML says 2027-28 supply falls short of demand) make advanced capacity harder for China to add. For China's side: Huawei's faster roadmap, over 1,000 deployed Atlas 900 A3 SuperPoDs and state demand policies pull compute toward domestic suppliers.
Bear case: The truce is temporary and its dates do not line up: the U.S. affiliates-rule pause ends 2026-11-09 absent extension, while MOFCOM says the wider arrangement runs to 2027-01-10. A lapse could restart mineral controls aimed at chip supply chains. China's AI know-how controls could fragment model deployment abroad. H200 volumes, Huawei's output and revenue, and Chinese model capability against U.S. models are UNKNOWN here.
Falsifiers: - A Federal Register notice extends or ends the affiliates-rule suspension before 2026-11-09 (resolves the date mismatch either way). - MOFCOM lets No. 70 lapse on 2026-11-10 or reimposes the 0.1% rare-earth rule (weakens the truce thesis). - Nvidia books material China data center compute revenue or adds China back to its outlook (weakens the foreclosure thesis). - The final Chinese technology catalogue drops or narrows the 23 AI items, or MOFCOM refuses registrations (tests how far the AI lever reaches). - Huawei misses its Q1 2027 Ascend 960DT date (weakens the substitution thesis). - ASML or TSMC disclose a sharp change in China's share of sales (tests whether tool and foundry controls bite).
What to watch
End of the U.S. suspension of the BIS affiliates (50% ownership) rule, absent an extension notice. (2026-11-09); Source: public-inspection.federalregister.gov
Legal end of MOFCOM No. 70's suspension of the October 2025 rare-earth and related controls; MOFCOM says the wider arrangement runs to 2027-01-10. (2026-11-10); Source: mofcom.gov.cn
Comment deadline on China's draft technology export catalogue (No. 48, 23 AI items); final effective date not set. (2026-11-15); Source: mofcom.gov.cn
End of MOFCOM No. 72's suspension of gallium, germanium and antimony curbs on the U.S. (2026-11-27); Source: mofcom.gov.cn
Next U.S.-China AI ('Super Intelligence') dialogue. (by end-November 2026); Source: mofcom.gov.cn
Expiry of the extended Kuala Lumpur U.S.-China arrangement, per MOFCOM. (2027-01-10); Source: mofcom.gov.cn
Huawei Ascend 960DT availability. (Q1 2027); Source: huawei.com
BIS replacement rule for the rescinded AI Diffusion Rule. (no scheduled date); Source: bis.gov
Whether U.S. agencies publish notices matching MOFCOM's 2027-01-10 extension. (no scheduled date); speculative, no scheduled source
AA inference
Inference (AA): this theme links AI capital spending to geopolitics through three levers: U.S. control of chips and tools, Chinese control of rare earths and minor metals, and, newly, Chinese control of AI know-how exports. The chip lever has done most of its work on market share: Nvidia's China data center sales are near zero by its own account, so the open question is China's absolute compute, which AA cannot measure from primary data (Huawei output and revenue are UNKNOWN). AA reads the November 2026 deadlines and the 2026-11-15 comment close on China's AI catalogue as the near-term tests. The thesis weakens if Nvidia books material China data center revenue again, if both sides publish matching extensions beyond 2027-01-10, or if the final AI catalogue is narrow in practice.
Sources
On 2026-01-13 Commerce's Bureau of Industry and Security (BIS) said it would review licence applications to export the Nvidia H200, AMD MI325X and similar chips to China case by case. Applicants must show the exports will not reduce chip production capacity available to U.S. customers, that the Chinese buyer has export-compliance procedures, and that the product passed independent third-party testing in the United States. (Source: media.bis.gov, accessed 2026-10-20)
The implementing BIS rule (Federal Register document 2026-00789, published 2026-01-15) sets the case-by-case policy for chips with a total processing performance (TPP) below 21,000 and total DRAM bandwidth below 6,500 GB/s destined to end users in China or Macau. All other applications to Macau, Country Group D:5 or entities headquartered there stay under a presumption of denial. (Source: public-inspection.federalregister.gov, accessed 2026-10-20)
The same rule requires the applicant to certify that aggregate TPP of such chips exported to China or Macau will be no more than 50 percent of the aggregate TPP shipped to U.S. customers for U.S. end use, and that a qualified U.S.-headquartered lab tests the chips in the United States before each export. (Source: public-inspection.federalregister.gov, accessed 2026-10-20)
BIS guidance dated 2026-05-31 states that a licence is required to export advanced computing items (such as ECCN 3A090.a/.b and 4A090.a/.b) to entities headquartered in Country Group D:5 or Macau, or whose ultimate parent is, wherever they are located. BIS says this requirement was first introduced on 2023-11-17 and is not new. (Source: bis.gov, accessed 2026-10-20)
A White House fact sheet dated 2026-01-14 says the President imposed a 25% tariff on certain advanced computing chips such as the Nvidia H200 and AMD MI325X, exempting chips imported to support the build-out of the U.S. technology supply chain. (Source: whitehouse.gov, accessed 2026-10-20)
Nvidia's fiscal 2026 Form 10-K says the U.S. government told it in April 2025 that a licence is required to export H20 to China (including Hong Kong and Macau); Nvidia took a $4.5 billion H20 charge in Q1 fiscal 2026 and generated about $60 million of H20 revenue under licences later granted. (Source: sec.gov, accessed 2026-10-20)
The same 10-K says U.S. officials expressed an expectation that the U.S. government will receive 15% or more of revenue from licensed H20 sales. (Source: sec.gov, accessed 2026-10-20)
The 10-K says that in February 2026 the U.S. government granted a licence allowing Nvidia to ship small amounts of H200 to China-based customers, that H200s shipped under the programme face a 25% tariff on import into the United States, and that Nvidia was 'effectively foreclosed' from competing in China's data center compute market. (Source: sec.gov, accessed 2026-10-20)
Nvidia's Q1 fiscal 2027 CFO commentary (quarter ended 2026-04-26) says no Data Center Hopper products shipped to China in the quarter, against $4.6 billion a year earlier; revenue was $81.6 billion and Data Center revenue $75.2 billion; the outlook assumes no Data Center compute revenue from China. (Source: sec.gov, accessed 2026-10-20)
On 2026-08-26 Nvidia reported Q2 fiscal 2027 revenue of $96.2 billion and Data Center revenue of $89.0 billion, guided Q3 revenue to $108.0 billion plus or minus 2%, and said it is not assuming any Data Center compute revenue from China in its outlook. (Source: nvidianews.nvidia.com, accessed 2026-10-20)
On 2025-05-13 Commerce rescinded the Biden-era AI Diffusion Rule, said a replacement rule would follow, and issued guidance on the risks of using PRC advanced chips, including specific Huawei Ascend chips, and on U.S. chips being used to train Chinese models. (Source: bis.gov, accessed 2026-10-20)
On 2024-12-02 BIS announced controls on 24 types of semiconductor manufacturing equipment and 3 software tools, new controls on high-bandwidth memory, and 140 Entity List additions with 14 modifications. (Source: bis.gov, accessed 2026-10-20)
On 2025-08-29 BIS said it would close the Validated End-User (VEU) programme for foreign-owned fabs in China; it intends to license operation of existing fabs but not capacity expansion or technology upgrades. (Source: bis.gov, accessed 2026-10-20)
The BIS rule published 2025-09-02 removed Intel Semiconductor (Dalian), Samsung China Semiconductor and SK hynix Semiconductor (China) from the VEU list, effective 120 days after publication. (Source: public-inspection.federalregister.gov, accessed 2026-10-20)
On 2025-09-29 BIS announced a rule extending Entity List restrictions automatically to companies majority-owned by listed parties, effective immediately. (Source: bis.gov, accessed 2026-10-20)
A BIS rule effective 2025-11-10 suspended the affiliates rule; it says the suspension 'is set to end November 9, 2026, absent a future extension.' (Source: public-inspection.federalregister.gov, accessed 2026-10-20)
A White House fact sheet dated 2025-11-01 says the U.S. would pause the affiliates rule for one year from 2025-11-10, while China would suspend its 2025-10-09 rare-earth controls, issue general licences for rare earths, gallium, germanium, antimony and graphite, and end investigations of U.S. semiconductor companies. (Source: whitehouse.gov, accessed 2026-10-20)
MOFCOM Announcement 2025 No. 61 (2025-10-09) required licences for foreign-made items with 0.1% or more by value of listed Chinese rare-earth items, and case-by-case review where the end use is 14nm-or-below logic chips, 256-layer-or-above memory, related equipment, or AI research with possible military use. (Source: mofcom.gov.cn, accessed 2026-10-20)
MOFCOM and Customs Announcement 2025 No. 70 (2025-11-07) suspended Announcements Nos. 55-58, 61 and 62 of 2025 until 2026-11-10. (Source: mofcom.gov.cn, accessed 2026-10-20)
MOFCOM Announcement 2025 No. 72 (2025-11-09) suspended clause 2 of Announcement 2024 No. 46, its curbs on dual-use exports to the United States, until 2026-11-27. (Source: mofcom.gov.cn, accessed 2026-10-20)
MOFCOM said on 2026-09-28 that the eighth round of U.S.-China talks (2026-09-20 to 09-23) agreed to extend the Kuala Lumpur joint arrangement to 2027-01-10 and to hold the next AI dialogue, co-led by He Lifeng and Scott Bessent, by the end of November 2026. The readout does not mention export controls, chips or rare earths. (Source: mofcom.gov.cn, accessed 2026-10-20)
A White House fact sheet dated 2026-09-25, on Xi Jinping's state visit, says the two sides set up a U.S.-China 'Super Intelligence (SI) Dialogue' whose next exchange will occur by November 2026; it contains no chip or technology export-control commitments. (Source: whitehouse.gov, accessed 2026-10-20)
On 2026-09-29 the President signed an executive order directing federal agencies to replace the term 'Artificial Intelligence' with 'Super Intelligence'; the fact sheet says the July 2025 AI Action Plan contained more than 90 federal actions. (Source: whitehouse.gov, accessed 2026-10-20)
MOFCOM and the Ministry of Science and Technology issued Announcement 2026 No. 48 on 2026-10-16, proposing to add 40 technologies to China's catalogue of technologies prohibited or restricted from export: 23 in AI (large models, agents, computing clusters, information processing), 5 in biomedicine and 12 in photovoltaics. Comments run to 2026-11-15; exporters must register listed technology exports in the meantime. (Source: mofcom.gov.cn, accessed 2026-10-20)
MOFCOM's spokesperson said 14 of the 40 items are proposed as prohibited and 26 as restricted, that 'the vast majority of AI technology can still be freely exported', that API, app, SaaS and lightweight on-device use of restricted large models falls outside the controls, and that the revision is not aimed at any country. (Source: mofcom.gov.cn, accessed 2026-10-20)
The White House released America's AI Action Plan on 2025-07-23, with more than 90 federal policy actions under three pillars: accelerating innovation, building American AI infrastructure, and leading in international diplomacy and security. (Source: whitehouse.gov, accessed 2026-10-20)
China's State Council issued its 'AI Plus' guideline on 2025-08-26, targeting penetration of new-generation intelligent terminals and AI agents above 70% by 2027 and above 90% by 2030. (Source: english.www.gov.cn, accessed 2026-10-20)
China's 2026 government work report (2026-03-05) says China will foster 'emerging pillar industries such as integrated circuits'. (Source: english.www.gov.cn, accessed 2026-10-20)
MIIT and NDRC issued a 15th Five-Year Plan (2026-2030) for electronic information manufacturing, published 2026-09-15, targeting sector revenue above 30 trillion yuan by 2030 and 'full-chain breakthroughs in integrated circuits'. (Source: english.www.gov.cn, accessed 2026-10-20)
China's Cyberspace Administration (CAC) said on 2026-09-14 that, as of 2026-08-31, 1,112 generative AI services had completed national filing and 731 generative AI applications or features had completed registration; 124 services were filed in July-August. (Source: cac.gov.cn, accessed 2026-10-20)
At Huawei Connect on 2025-09-18 Huawei set an Ascend chip roadmap (950PR Q1 2026, 950DT Q4 2026, 960 Q4 2027, 970 Q4 2028) with self-developed high-bandwidth memory, and an Atlas 950 SuperPoD of up to 8,192 Ascend 950DT chips and 8 EFLOPS at FP8 for Q4 2026. (Source: huawei.com, accessed 2026-10-20)
At Huawei Connect on 2026-09-17 Huawei said the Ascend 960DT will be available in Q1 2027, three quarters ahead of its original roadmap, that Ascend moves to a one-generation-a-year cycle (970 in 2028, 980 in 2029), that over 1,000 Atlas 900 A3 SuperPoDs have been deployed, and that the Atlas 950 SuperPoD is in large-scale commercial use. (Source: huawei.com, accessed 2026-10-20)
On 2026-10-14 ASML reported Q3 2026 net sales of EUR 11.7 billion, guided 2026 sales to EUR 44-45 billion, and said 'our supply as currently planned for both 2027 and 2028 will not fully meet the demand of our customers'; the release does not mention China. (Source: sec.gov, accessed 2026-10-20)
In ASML's Q3 2026 results video transcript, CFO Roger Dassen, discussing the 2026 outlook, said: 'The China part of the total business we expect to be around 20%.' (Source: investor.asml.com, accessed 2026-10-20)
TSMC's Q3 2026 management report shows China at 5% of net revenue by geography (6% in Q2 2026) and North America at 79% (78%). (Source: investor.tsmc.com, accessed 2026-10-20)